Help! Property Mngmt Co Leased My Approved Short Sale that is in Foreclosure for 12 months

Help. Can a property management company lease a property for 12 months knowing that there is a Trustee Sale Date & the property is listed for sale? I have a short sale listing in Arizona that I have finally received an approval from the lender and escrow has been opened. The seller had a tenant in the property when I first listed the property, but moved out shortly. Four months have gone by and I found out yesterday that the home was just leased out for 12 months. We are suppose to be closing escrow on the property in two weeks. The property management company states they had an agreement with the seller to go ahead and rent the property. However, the seller states they were told only month to month and this was prior to us finally receiving an acceptance on the short sale. The seller did not even know the property had been rented yesterday. The property management entered the home, and changed the locks. Not sure how they got the key, because the locks were changed by the seller's lender and I was given the new key. I don't see how a property management company can lease a property for 12 months to tenants knowing that the property is in foreclosure and could be foreclosed on at anytime. I have requested several times for the sale date to be postponed. The property management says they did nothing wrong. If the property does not close escrow at the end of the month because there are tenants there, then it will foreclose. The seller loses, but the tenants now have rights to stay. Doesn't seem right to me. Is this fraud or against the law?